Be Prepared for Your Next Compliance Sweep

Is a regulatory audit coming up for your firm? Leverage the right technology and processes to pass with flying colours

Does the thought of a regulatory audit may make you cringe? You may be familiar with the compliance “Sweep” that happened earlier this year in May that the Alberta Securities Commission (ASC) performed. The ASC is the regulatory agency responsible for administering the province’s securities laws, and have since released their exempt market dealer compliance results. There was a total of 66 Alberta-based EMDs and most of these results were not up to maximal compliance standards.

This Sweep isn’t just in Alberta, it’s nation-wide. The Canadian Securities Administrators (CSA) is the securities regulating body of the 10 provinces and 3 territories in Canada, and handles Sweeps throughout the country. For example, in Ontario, the equivalent of the ASC, the Ontario Securities Commission (OSC), conducted a Sweep of 87 portfolio managers and EMDs to assess their compliance back in 2012. The areas of review included: automated compliance systems, sales and marketing practices (including KYC, KYP and suitability), conflicts of interest, relationship disclosure information, and client reporting.

In the Alberta Sweep, there were a range of issues in the compliance spectrum. Some firms still achieved a high level of compliance despite having a large regulatory burden. These firms were noted to have effective compliance processes and integration with automated compliance systems; the results from utilizing the benefits of technology tend to be self evident. In other cases, compliance deficiency can lead to disciplinary action, resulting in fines and reputational damage.

At which end of the spectrum would your firm fall in a compliance Sweep?

As much of a burden regulatory initiatives may seem to be, it can actually be an opportunity for growth and improvement and even a competitive advantage. In the example of this Sweep, it can be seen as a chance for firms to really understand compliance practices, including suggested practices and unacceptable practices. It encourages firms to use this notice as a self-assessment tool – they should seek guidance or assistance and ultimately enhance their compliance with regulatory obligations. A key component could be seeking out the right technological solutions to make compliance a fully ingrained, largely automated process to keep compliant with the regulations. This ultimately helps your firm achieve a high level of compliance, and get through the same challenges these firms in the Sweep faced.

Getting through a Sweep doesn’t have to be stressful with the right technology and processes in place. For more on how to leverage these, visit us here.